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First and foremost, this is a good time to state that stocks, shares and equities are all interchangeable terms! Which term is most popular varies from country to country.
Shares represent part ownership of a company. Traditionally, a share has represented a portion of a company available for investors to purchase. In today’s world, fractional shares are becoming increasingly popular. Shares can be bought and sold, meaning they have a monetary value.
In an investment sense, shares represent ownership of part of a firm's future earnings. This explains the impact of future performance projections on daily share prices.
Source: Financial Times
There are many things they may be referring to, but in most cases, they will simply be referring to the Market Capitalization (or "Market Cap") of a company. The definition of market cap is the number of shares in the company multiplied by the last traded price of that company's shares on the stock exchange. It is a mechanical calculation. Let’s say that a share’s latest trade was of just one share, which happened to trade at 10% lower than where it had been trading all day. The company would be deemed to have lost 10% of its value!
Shares are issued initially for numerous reasons:
A stock market is a marketplace where shares are bought and sold. There is no one stock market, but rather, numerous stock markets located in different parts of the world. Examples include:
At a stock exchange, investors can buy and sell shares, exchange-traded funds, and more. The exchange functions as a marketplace, with buyers looking to buy a stock for as little as possible and sellers trying to sell for as much as they can get away with.
When trading on a stock exchange, we have next to no idea who we are buying from or selling to as we are operating through the secondary market. Without a stock exchange, we would have to trade with our close associates!
Companies must meet strict criteria and (usually) have excellent financial records to be listed on a stock exchange.
A stock market index measures the performance of a stock market or a subset of a stock market. When you hear about a stock market being up or down, it’ll reference the performance of a stock market index. Investors use stock market indexes to compare prices with previous market performance. Below are some examples of stock market indexes:
STOCK INTRODUCTION. COMPLETED. ✅
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